Could Online Casinos Ease New York’s Mobile Sports Betting Tax Rate? 

New York state lawmakers hesitant to lower the state’s 51 percent tax rate on mobile sports betting operators might have a reason to change their mind: online casinos. 

Spectrum Gaming Group officials told a joint public hearing of the state legislature’s racing and gaming committees this week that iGaming gross gaming revenue (GGR) in the first year in New York could total $2.5 billion. That would allow the Empire State to surpass $600 million in tax revenue from online casinos in year one at a much more modest rate of 30 percent. Mobile sports betting tax revenue in New York for the first year totaled approximately $700 million. 

Operators and others say that even more growth could be realized by allowing more local investment and better odds and bonuses, while cutting the tax rate on mobile sports betting.

“Sports betting is a good appetizer, but iGaming has proven to be the main course as far as revenue generation is concerned,” Light and Wonder (formerly Scientific Games) official Howard Glaser told New York lawmakers in testimony alongside Spectrum Gaming on Tuesday. 

New York Mobile Sports Betting Tax Rate Unsustainable, Operators Say

The news came on the heels of testimony by FanDuel and DraftKings warning lawmakers that New York state’s 51 percent tax rate on mobile bets could stunt tax revenue and gaming investment in future years. 

FanDuel President Christian Genetski told lawmakers Tuesday his company plans to invest half as much in New York as in other states this year as it struggles to make money in what top sports betting operators see as a restrictive market. 

“We are going to be profitable in 2023, and we can’t get there in New York without more return on our investment,” said Genetski.

FanDuel isn’t alone. DraftKings CEO Jason Robins, who also testified Tuesday, said his company is also pulling back on investment in New York. 

The results of operator hesitancy are already starting to show, based on data shared by Spectrum Gaming on Tuesday. New York mobile sports betting handle per capita fell by 21 percent after the first quarter – something Spectrum official David Isaacson called an anomaly.  And mobile sports betting wagering volume in New York fell in the fourth quarter of year one, he added – something that doesn’t usually happen in competitive states, like New Jersey and Pennsylvania

“We believe this is happening because operators are spending less on promotions,” said Isaacson. 

Operators say a lower tax rate more in line with Pennsylvania’s 36 percent would mean more growth in the long run.

Addabbo Pushing for iGaming, Lower Tax Rate on Mobile

Legislation sponsored by Senate Racing, Gaming and Wagering Chair Joe Addabbo pending in the New York Senate would reduce the mobile sports betting tax rate with a corresponding increase in operators. But it remains to be seen if lawmakers, and Gov. Kathy Hochul, will decide to act on the legislation this year.

Expect Addabbo to be persistent, however — not only on the issue of lowering the rate on mobile sports betting, but iGaming as well. 

New York officials are pushing for the legalization of online casinos (Illustration by 3D Graphic Design)

The Queens Democrat made a case for online casinos yesterday after Glaser told lawmakers that iGaming in six states where it is currently legal (outside Nevada) generated twice the tax revenue of all legal sports betting nationally in 2021 (without hurting brick-and-mortar casinos, according to Glaser). 

“We’re losing roughly $600 million to an illegal market every year … we’ll say $1 billion to include the out-of-state bettors, then the $3 billion we would have made in revenue,” said Addabbo. “Every year we don’t do iGaming in New York it’s $4 billion lost – revenue lost and loss to another state and the illegal market.

“This is the argument we made with mobile sports betting. They were going to another state, they were doing it illegally, and every year we lost $1 billion and so forth,” he said. “I would think New York would do something.” 

About the Author
Rebecca Hanchett

Rebecca Hanchett

Legislative Writer
Based in Kentucky's Bluegrass region, Rebecca Hanchett is a political writer who covers legislative developments at Gaming Today. She worked as a public affairs specialist for 23 years at the Kentucky State Capitol. A University of Kentucky grad, Hanchett has been known to watch UK. basketball from time to time.

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